Don’t Forget the Revenue

Today is the last day of work for employees impacted by the latest round of layoffs implemented by the new Executive Team. There are multiple things that bother me personally about these layoffs that targeted City employees on the second floor (Engineering, Planning, and Building Divisions), but the one issue that troubles my logic-based brain the most is the lack of consideration towards the revenue side of the equation.

The new Executive Team has been placing a lot of focus on the deficit in Fund 400, Capital Projects. If I am to give them some credit, I would offer up that their inexperience and lack of institutional knowledge is the basis behind the energy expended trying to tie the Fund 400 deficit to second-floor employees. This is because those of us who have a basic understanding of how employees account for their workday and how salaries are funded, would have known to pull timecard reports to account for the Fund 400 deficit. We will discuss this in more detail in our upcoming Fund 400 post.

But what about the revenue? How can you base layoffs on the expenditure side of the equation only? In this budget-constrained era, is it not even more important to consider how and where a business obtains its revenue? If you had to look at reducing expenditures, would you not also be considering how to increase or even maintain revenue?

The City’s revenue comes from a number of sources. Revenue sources include but are not limited to Sales Tax, Property Tax, Utility Users Tax, Maintenance and other District Funds, Enterprise Funds (such as the Private Development Fund), Development Impact Fees, and miscellaneous Grants received (usually for Capital Projects).

Appendix A-1 of the City of Chico’s Budget is a section entitled Comments Regarding Funds, Revenues and Expenditures. This section of the Budget is a quick summary of the funds available to the City and gives a short description of each of the abovementioned revenue sources. If you are so inclined, you can pull up the Budget on the City of Chico’s website; Appendix A-1 of the current Proposed Budget starts on page 249. I am including the four pages of interest here – the City’s security settings on their Budget document prevent me from providing a more clear document for you.

Without getting too technical (which I have been accused of!), only the Development Impact Fees, most of the Enterprise Funds’ revenue sources, and any Grants received are directly related to work completed by employees. In fact, the only consistent direct link between revenue generation of the prior three sources and employee work efforts exists with the second floor employees (again…Engineering, Planning, and Building Divisions).

While one could argue that efforts towards economic development result in additional tax-based revenues, it is not possible to quantify a direct correlation between hours invested and additional taxes received.

This whole issue is why I told Council on October 1 that unless they want to try and fund all City operations with a limited General Fund, they must take into account which departments generate the City’s additional revenue. Instead of heeding my warning and considering the big picture of expenditures and revenue, the Executive Team proceeded with handing out layoff notices after the October 1 Council meeting to twelve employees on the second floor.

Let me be clear – – – of the 18 notices sent, 12 were delivered to City Hall’s second floor. That is 67% of the notices. The numbers are even more appalling when you consider the number of employees that exist in each department. While I will not digress on this point…just consider that in a City of approximately 350 employees, the departments/divisions on the second floor are not even in the top four for number of employees.

So today I will shake my head in wonderment, once again, at actions implemented by the new Executive Team and allowed/approved by our community’s City Council. I will take some comfort in knowing that we here at Truth Matters, Chico! will continue to do our best to speak out and document any wrongdoings we discover and I suppose I will just keep my fingers crossed that the City Council opens their eyes and ears to the big picture soon. Hopefully before it’s too late to right the ship… Which, in my opinion, is honestly almost upon us.

Simplification is the challenge – especially when trying to include facts with your statements! My logic-based brain still cannot get around the idea of who lays off their lower paid admin staff and their only employees who can generate additional revenue during these tough economic times?

I hope this point becomes abundantly clear in our “In the Weeds” series but this additional revenue I am referring to in this post is very important because it is how you are able to reduce costs to the General Fund. (Juanita – I know you are smart enough to see through the “stuff” [ha ha!] and know why the City does not want these “other” costs to go to the General Fund…)